For the 49-day old Arvind Kejriwal-led Delhi government, its three-way slugfest with the regulator and the private electricity discoms to pare power tariffs seemed to have missed out on the costliest source of power supply in the capital, which, ironically, lay right within its fold.

The average cost of power billed by the Delhi government-owned, partially-commissioned the Pragati-III gas-based power project at Bawana in north-west Delhi during the last six months works out to a whopping Rs 13 per unit, three times the average cost of procurement for the Delhi utilities from other generation sources.

Of its total installed capacity of 1,371 MW, the project in Bawana is currently running about 300 MW currently run on 1.5 mmscmd (million standard cubic metres per day) of domestic gas available to it.

The utility has, over the course of the last six months, also been scheduling a capacity of 620 MW (second block of the project) on imported LNG (declaring it as available for generation).

This is despite the capacity not being requisitioned by the three private distribution companies on account of the tariffs being high. Even though there are no buyers for the power generated using imported LNG, the utility is allowed to technically show plant availability using imported fuel, enabling it to fully recover capacity charges (or the fixed charges).

With the block being scheduled to run on imported LNG not operating fully, the capacity charge is spread over a much smaller capacity, resulting in higher charges. This is clearly evident during November and December 2013 (see chart).

The Central Electricity Regulatory Commission (CERC) has, on through a May 25, 2012 order, approved the utility a fixed charge of 303 crore per annum, which translates to Rs 25 crore per month. However Pragati power had started billing its customers to recover a much higher Rs 70 crore per month, as is evident in the billed invoices by commissioning more assets since 2012. For this, according to CERC sources, there is no approval of the regulator.

Conceived as a Commonwealth Games project by the previous Congress government, the project was supposed to be made operational before October 2010. Despite missing several deadlines, the project, entailing costs of Rs 5,195.81 crore and funding of 30 per cent of the approved cost as equity amounting to Rs 1,558.74 crore, is yet to be fully commissioned. The cumulative capacity charge for the June-December 2013 period (for Delhi, Haryana and Punjab) amounted to a total of Rs 418.35 crore, which combined with the energy charge of Rs 120.81 crore for the period, worked out to an average tariff of over Rs 13 per unit for the six months period.

Since it has a power purchase agreement in place with the five Delhi discoms — BSES Yamuna Power Ltd, BSES Rajdhani Power Ltd, Tata Power, MES (Cantonment) and New Delhi Municipal Council — as well as Punjab and Haryana, all the utilities are forced to shell out capacity charge for the fuel-starved second block units of the Pragati project that is being scheduled on imported fuel. Consumers, in turn, have to foot the bill by way of retail tariffs.

Around 70 per cent of the power from the project is being supplied to the discoms of Delhi, while 10 per cent each going to Punjab and Haryana. As it stands, one of the solutions is for the Delhi government to forego the return on equity — which works out to 20-30 per cent of tariff — in order to provide relief to consumers.